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Friday, June 27, 2014

Markets rise cautiously in slow summer trading

Dow added 6 from buying in the last hour, advancers over decliners 2-1 & NAZ added 18. The MLP index jumped 2 to the 521, yet another new record, & the REIT index was up 1+ to the 302s. The MLP index has risen almost 70 since mid Mar, one of its best runs in history. Junk bond funds were mixed & Treasuries pulled back after recent gains. Oil & gold were flattish.

The EU gave Russia 3 days to stop a separatist rebellion in Ukraine or face deeper sanctions as the gov in Kiev prepared to extend a cease-fire originally due to expire tonight. EU
leaders demanded that the separatists, whom Ukraine & its
allies say are backed by Putin’s gov,
return border checkpoints, release hostages & start talks to
implement a peace plan drawn up by Ukrainian pres Poroshenko
by Mon. Failure to do so will result in “further significant
restrictive measures” against Russia. “If
no visible progress is made on these points, then we are prepared to
take further decisions, including drastic measures,” German Chancellor said. “We expect progress to come really in the hours ahead.” The US reinforced EU demands. The White House press secretary said the conditions “are very specific steps that the Russians can take by Monday” or face more economic costs. Trying
to bolster solidarity from richer nations to Ukraine’s west against
what it calls Russian aggression, Poroshenko also signed a free-trade
pact with the euro, which he said showed Ukraine’s “sovereign
choice in favor of future membership of the EU.” “What
a great day, maybe the most important day for my country after
independence day,” Poroshenko said after signing the agreement. “The external aggression faced by Ukraine gives
another strong reason for this crucial step.” Accusing Putin’s
gov of allowing weapons, manpower & other support to flow
across its border into Ukraine, the US also is preparing sanctions
against Russia on technology aimed at exploiting & producing oil & gas products, a
major part of that country’s economy.

The Federal Reserve is finally succeeding in its
efforts to generate higher inflation. Now it must do the same for
wages to prevent US households from getting squeezed. The
price measure tracked by the central bank rose 1.8% in May from a
year earlier, the biggest 12-month gain since Oct 2012, & just
shy of its 2% goal. After
adjusting for inflation, consumer spending dropped for a 2nd
consecutive month. Americans are paying more to fill up their grocery carts & car fuel tanks,
leaving less for discretionary items, including the latest fashions,
restaurant meals & movie tickets. While rising stock & and home prices are shoring up finances for higher-income households, fatter paychecks
would allow spending by the majority of consumers to shift into a higher
gear and stimulate economic growth. The central bank’s preferred measure of inflation has been below its
goal since Apr 2012, causing concern that disinflation will make it
difficult for borrowers to pay off debts & for businesses to boost
profits. Fed Chair Yellen has said inflation persistently below target
could pose risks to economic growth. Last week she
said that she would “worry about downside risk to consumer
spending” should wages fail to accelerate even as the labor market
improves. Commerce Dept data yesterday showed those
concerns weren’t misplaced. Consumer purchases, after accounting for the
influence of prices, fell 0.1 % in May after a 0.2%
decline a month earlier, signaling the rebound in growth in Q2 will be more muted than previously projected.

Eli Lilly won European backing
for a biosimilar version of Sanofi’s (SAN) Lantus insulin, paving the
way for the first copy of the French drugmaker’s top-selling
medicine. Abasria insulin was recommended by the European
Medicines Agency’s Committee for Medicinal Products for Human
Use for the treatment of diabetes, the agency said. The European Commission, the EU’s executive
arm, usually follows the panel’s recommendation. Lantus, which garnered Paris-based Sanofi €5.7B
($7.8B) in sales in 2013 & loses patent protection in Europe next May. The US patent on Lantus expires in
Feb, but biosimilar competition there may be delayed after
Sanofi in Jan said it was suing LLY
over its plans to introduce a version in the US. Biosimilars are lower-cost versions of complex drugs made
from living organisms, unlike generic drugs which are exact
copies of simpler chemical compounds. Abasria, also known as
insulin glargine, has the same amino acid sequence as Lantus,
Lilly said, and has been shown in trials
that it has comparable quality, safety & efficacy to the Sanofi
drug. LLY has made an aggressive push to expand its diabetes
products, with drugs in every class of therapy for what it calls
a full suite of offerings for doctors, health insurers &
govs. The company said last month a separate once-daily insulin
injection called Peglispro was better than Lantus in controlling
patients’ blood sugar, a measure of how well a patients’
diabetes is under control. LLY will file for US
approval to sell that drug in the first quarter of next year. LLY stock was up pennies. If you would like to learn more about LLY,
(Click here for a FREE analysis of LLY and be sure to notice the intermediate time frame

Eli Lilly (LLY)

DuPont, a Dow stock, revised its outlook for operating EPS for Q2 & full year 2014, due primarily to lower than expected
quarterly performance of its Agriculture &, to a lesser extent,
Performance Chemicals segments. The company expects operating EPS
in Q2 to be moderately below the $1.28
recorded last year. As a result, its full-year outlook for operating EPS was lowered to $4.00-$4.10. The revised outlook in
Agriculture reflects lower than expected corn seed sales & higher than
expected seed inventory write-downs. Given favorable soybean economics,
soybean sales volume in North America are higher than expected.
However, higher soybean volume will not fully offset the decline in
corn volume, especially given the transition under way in the company's
soybean lineup to newer, higher performing products. The company
believes this is a short-term negative trend, & there will be strong
demand for its next generation soybean products. The revised outlook
also reflects lower than expected crop protection herbicide sales,
largely due to weather. "While 2014 is a transition year
in agriculture, the revisions to the outlook we made today do not meet
the expectations we set for our Agriculture segment or for the company,"
CEO Ellen Kullman said. "We have a strong global
market position and a rich pipeline and we will make the necessary
changes so that we return to our five-year track record of delivering
the reliable, attractive growth our shareholders expect from this
segment." Performance Chemicals Q2 results will be impacted by lower than expected selling prices
in refrigerants for mobile & stationary applications. The stock sank 2.26. If you would like to learn more about DD,

E.I. du Pont de Nemours (DD)

Fri in the summer brings slow trading & today was no exception. Volume was light. A little buying in the last hour put Dow into the black after being down all day. Intl tensions remain high & forecasts for growth in the US economy are being trimmed. Despite those dark clouds, Dow & the S&P 500 are near record highs. This disconnect can not last.

Dow Jones Industrials

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